Friday bits: Dow 2,000,000, Would you rather owe money or get a tax refund, Raising smart kids

Money

Let’s start with this: I HATE that the media is fixated on how many points the Dow Industrial Average moves in a day. If the Dow is up 500 points today, that’s not the same as when the Dow was at at 10,000 or 5,000. Back then, a 500 point move meant that the index 0.5% or 1.0%, respectively. Today, as the Dow is approaching 20K, a 500 point move is on 0.25%. Indices and individual stocks frequently trade up or down one-quarter of one percent each day. The number itself doesn’t tell the while story. Think back to when the down was at 5,000 or even 1000. A 500 point move would be enormous. A 500 point move when the Dow was at 5,000 would be the market was up 10% that day; that’s news! When the Dow was at 1,000, a 500 point move would mean that the market was up 50%.

You can’t look at the number of points that the Dow is up or down. But as I mentioned, triple digit moves up or down in the Dow provides headlines. When the Dow is at 20K, can you even imagine the Dow reaching 2,000,000? Well, thanks the the most powerful force in the universe, compounding, we could EASILY see the Dow reach 2 million by 2099. Okay, so if you’re reading this, it’s likely you personally won’t see this, but given that given the Dow history of 7.14% annual returns, reach two million is well within reach since that would only necessitate a 5.7 annual return.

If you haven’t noticed, it’s tax time. I have noticed, not only because of the endless emails I receive reminding me of this grand celebration, but also because of the people with whom I interact. As those I know complete their tax returns, I observe their pure joy as they realize they’ll be receiving a refund from the IRS.

ADULT MONEY HABITS are set by age seven, according to a 2013 Cambridge University study. Want to get your kids on the right track? Three things should scare the hell out of you. First, parents teach kids about money all the time, often without knowing it. “Turn off the lights.” “Let’s go shopping.” “We will save if we have something left over.” It’s unavoidable. The subject of money is as omnipresent as the air we breathe.

Jump$tart joined us for our #WBChat on January 19th! Our #afinlitfuture #WBChat included awesome advice on how to teach your kids about money and Jump$tart shared many wonderful tips. In total we had 122 participants, reached over 284K people, and had over 10.4 million impressions.

The Economics of the Affordable Care Act: The Affordable Care Act (ACA), which President-elect Donald Trump and the Republican-controlled Congress have vowed to repeal, was crafted to overcome two basic problems in the provision of health care… First, the costs are incredibly skewed, with just 10 percent of patients accounting for almost two thirds of the nation’s healthcare spending. The other problem is asymmetric information: Patients have far more knowledge about the state of their own health than insurers do. This means that the people with the largest costs are the ones most likely to sign up for insurance. These two problems make it impossible to get to universal coverage under a purely market-based system.

Last week, Morningstar published their Asset Flows Commentary for 2016. As you can see in the chart below, active funds have had more outflows in each of the last two years than they did in 2008. Below, I pulled some of the notable numbers (emphasis mine). Among U.S. equity funds, passively managed funds–led by Vanguard’s offerings–took in $50.8 billion during December

IS IT POSSIBLE to have too much money? This falls firmly into the “nice problems to have” category. Still, imagine you’re the lucky recipient of a winning Powerball ticket or a rich aunt’s bequest. You might find yourself grappling with three threats to your happiness.

At some point in your life, you’ve talked about your credit score. In fact, you’ve probably talked about it many, many times. What it is, how to improve it, how much you paid to get it… But what if I told you that “it” is really just one of dozens of potential scores out there, all based on your credit history?

Georgia, 25, lives with two roommates in Denver and recently started grad school to become a nutritionist. She’s taken on student loans, doesn’t have much in the way of savings, and wants to reduce her everyday expenses as much as possible. She knows that coupons and online deals can be helpful, but she doesn’t have time to pore over newspapers or circulars (nor the space to buy in bulk, which feels wasteful anyway — she’s only one person). How can she take advantage of discounts to make her dollars go as far as possible, without expending a lot of energy and time?

Employment

When Barack Obama took the presidential oath of office in 2009, the economy was 14 months into a historic meltdown. The U.S. was losing more than 700,000 jobs a month, the Dow Jones Industrial Average was 42 percent below its 2007 high and one in 45 households would file for foreclosure during the year.

Social Security

The Social Security program paid more than $900 billion to recipients in 2016. If your goals include attaining financial security in retirement in part via Social Security income, you’ll need to decide when to start collecting benefits. Here are three reasons why you might want to start collecting early.

Airlines

For many people, flying is about as appealing as cleaning a toilet — and it may get worse. On Wednesday, American Airlines announced that its “no-frills” Basic Economy seats would go on sale Feb. 10 in some markets. If you buy one of these seats, you can only bring on a carry-on small enough to fit in the seat under you (if you bring any other bags, you must pay extra), will be among the last to board, will not be able to change or get a refund for your ticket or get same-day standby, and will have a seat assigned to you automatically. American says it is doing this to more effectively compete with the low-cost carriers.